MGEX Research

Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.

Unique Circumstances

When USDA released it initial 2008/09 World Agriculture Supply and Demand Estimates in June of 2008, projected United States soybean meal use was estimated at 31.8 million tonnes and most recently within the February 2009 WASDE suggests a level of 27.9 million tonnes.

The number one annual US soybean meal user is poultry. Of the total annual soybean meal use, 50% is for US poultry, 25% for hogs, 13% for cattle, 6% dairy, 3% pet food and balance for others. It may come of little surprise with the chicks placement down 7% from June 2008 to present, USDA had little choice but to reduce soybean meal consumption.

With livestock and poultry numbers down year on year, it may come as little surprise year on year soybean meal use is down 7.3%. What is unique is present projected usage for 2008/09 is down for a second consecutive year and has only occurred twice before dating back to the mid 1960’s. Most recently was 2002/03 and 2003/04 and a three year stretch from 1970/71 through the 1972/73.

For every metric ton of soybean meal use eliminated, it represents 46.39 fewer bushels of soybeans use to manufacture the meal. Allendale is focusing on the weekly eggs set and chicks placed report from USDA as a key barometer as to projected use of soybean meal. As long as the trend remains downward for poultry numbers and a competitive feed fed per pound of gain of 1.8 to 1 vs pork at something closer to 2.75:1, we use the poultry market as potentially the first sector to realize notable positive profit margins.

Until the downward trend of fewer livestock and poultry reverses and global economy becomes healthier, Allendale suggest old crop soybean demand for meal use is likely to gravitate lower.

Allendale has recommended since late December of 2008 to clean the bins of old crop soybeans and corn and maintains as demand continues to struggle for both soybean meal and soybean oil as reflected in monthly crush reports, value for the crops to be under pressure.

Please contact an Allendale representative with old crop and new crop recommendations. 800 551 4626

Ask about how the Allendale Evaluator may assist in your new crop marketing plans.

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009